Very soon you will hear echoes in your vegetable market like, “Suniye, Suniye….., Reliance Mango Hungama; 1000 rupiah aam lou aur 100 rupiah cell phone call mufat karo” (Translated in English – Reliance Mango offer; Buy Mangoes worth Rs1000 and get to make 100 rupees worth cell phone calls free on Reliance). Now get ready to accept an offer from your vegetable salesman for cell phone.
Reliance and Tata telecom are all set to woo the rural masses of India. Their choice of channel partners are the intermediaries between villagers and the town/city businessmen like vegetable vendors, water-pump and pipes dealers, pesticide vendors, etc. Rural markets are something which the corporate India had ignored for a long time until the country’s largest consumer giant, Hindustan Lever Limited woke up to service their needs in early 2000. Now Reliance & Tata’s have not only identified this as a potential market, but they are also under Universal Service Obligation (USO) from the Communications and IT Ministry.
Reliance is optimistic about tapping over 6 lakh customers in 6000 villages of which 4000 villages already have Reliance conectivity now. Tata’s who were confused with which technology to adapt are slow in the game as they have substantial investments in GSM service provider Idea Cellular and now going with CDMA. Tata’s are having just 70 lakh customers and are hoping to add 20 lakhs more by the end of March 2006 of which majority thrust will be on rural customers mostly from the states of Karnataka, MP, UP(East and West), Punjab, Haryana and Rajasthan.
Orascom of Egypt controls upto 65% of Pakistan’s and 8% of Bangladesh’s cell phone market. It paid USD 1.3 Billion to buy 19.3% stake in HTIL – Hutchinson Telecom International Limited. HTIL is a subsidary of Hutschinson Whampoa group. HTIL operates with various Indian partners with Essar being the major Indian partner in Hutchinson Essar. With this deal, Orascom gets to indirectly hold 8% in Hutchinson Esaar which has 13 Million subscribers. Orascom will also get one board members seat on Hutchinson Essar. Orascom also has the right to increase its stake in HTIL and thus subsequently raise stake in Hutchinson Essar to 10%.
Lets take a closer look at Hutch – Orascom USD 1.3 Billion deal.
80% of HTIL’s subscribers are from Hutchinson Essar join venture. Hutschinson controls 42% of the venture while Essar Teleholdings control 33% and the balance divided between various Indian operators like Fascel, Kotak and BPL after they voluntarily merged their operations into the Hutch Essar venture.
Looking at what Maxis paid for Aircel acquistion, this deal appears to be very very expensive. Sure Hutch-Essar is a national operator, has higher growth rate and footprints in all the major circles and licenses for 6 more through the acquistion of Essar Spacetel. Orascom’s 8% stake will translate to 1.04 Million subscribers directly under its control for which it has paid Rs4,600 crores, which in-turn translates to paying Rs44,230/subscriber(USD950). Considering this deal, Maxis got a cake walk deal, presence in Tamil nadu and an entry into the world’s fastest growing telecom market.
Continued growth in GSM subscribers in India during the last quarter of 2005, has reason for one Finnish company to keep smiling – Nokia. Nokia expects its handset sales to be close to 900 million units in 2006. Continued co-operation from the government by reducing import duty on handsets from 50% in 2000 to 5% in 2005, thus eliminating the grey market and a constant push by IT Minister Mr. Dayanidhi Maran to expand services to rural areas will not only help boost the bottomline of handset manufacturers but also that of network infrastructure companies. Further concessions are available for handset manufacturers who want to setup shop in India and localize to the Indian diversity.
Nokia is the market leader in India followed by Sony-Erricson and Samsung. The trio control a whoping 85% of the GSM handset market. GSM is the most sought after service with 80% of Indian subscribers opting for it, while the remaining 20% is divided between CDMA and WLL.
As Infoworld reports that AOL is testing new AOL calendar, webmail and a toolbar for firefox browser. Their couldn’t have been a better time to report this development. Just a day after the Billion Dollar Google AOL deal. I am not going to talk about the deal as more than million people have already spoken about it.
Here is an insider look at Google AOL or AOL Google deal. This is just one of the things I am speculating as Google likes to keep the terms closed. If you have noticed, Google is aggressively spending and supporting to get FireFox installed on as many clients as possible. AOL’s proprietary and lousy client uses Microsoft’s Internet Explorer as the engine to drive. If Dr. Eric Schmidt was careful in spelling terms of the deal, then I am sure he wouldn’t have missed this clause of integrating FireFox browser in AOLs client throwing away Internet Explorer.
Latest statistics from W3Schools indicate that Non-IE browsers have a market share of 33% with FireFox leading at 19.6%. If Google replaces FireFox as the engine in AOL client, then expect FireFox to gain significantly over Microsoft’s IE.
The pre-diwali subscription addition is showing no signs of slow down. Most of the additions were in the Cellular category with Wireless in Local Loop(WLL – something very popular in the Indian Convergence story) securing second place ahead of Land lines. 37.9 lakh new connections were added for month ending Novermber compared to 32.4 lakhs and 28.5 lakhs in October and September respectively. The total tally is skewed towards cell phone subscribes, with 7.1 Crores and land line subscribers at 4.9 crores. The tele-density is now at 11% and operatrors expect more growth as they move interior to remote towns and villages. DOT has set an ambitious yet achievable target of 25 crore subscribers by the end of 2007.
To achieve this growth, Indian convergence service providers must scale up their infrastructure investments as well. They have spent Rs50,000 crores in 2004 and Rs57,000 crores in 2005 and are expected to spend Rs70,000 crores in 2006. This explains why CISCO and Intel are not only investing agressively in Indian centers but are also buying smaller Indian firms in the digital convergence arena. Is the convergence market shifting to the east ?
C Sivsankran is an ambitious and cut-throat business man. ET reports that he is hitiing the JackPot again.(Recollect he has already built and sold DishNetDSL to Tatas after he was unsuccessful to win controlling stake in VSNL from the Government of India). He was in talks with the Hutchinson group earlier this year to sell Aircel(T.N & Chennai circles) a deal which was valued at Rs2,860 crores. (Rs14,300/subscriber) with 20 Lakh subscriber base.
Who is Buying Aircel ? Malaysian Billionaire and Telecom Barron, Ananda Krishnan’s Maxis Telecom is closing the Aircel deal @ Rs3,600 crores. Maxis has taken the right step in entering India considering future growth and synergies in the two networks.
Will C Sivsankaran step in Forbes Billionaires list now ? Hardly matters to him.